INTEREST IN CONTRACTS

OFFICES AND OFFICERS ‑- MUNICIPAL ‑- PORT DISTRICTS ‑- INTEREST IN CONTRACTS

Applicability of RCW 42.23.030 to the lease of moorage space from a port district by one of the members of the port commission; legal consequences of voting by a port commissioner upon a matter in which he is interested as a lessee of moorage space.

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                                                               September 8, 1976

Honorable Leona Savage Osterman
State Representative, 24th District
Route 3, Box 249
Shelton, Washington 98584                                                                                                               Cite as:  AGLO 1976 No. 54

Dear Representative Osterman:

            By letter previously acknowledged you requested our opinion regarding the applicability of RCW 42.23.030 to the leasing of moorage space from a public port district by one of the members of the port commission which governs that same district.  You have also asked whether, in the event that the resulting contractual relationship between the port district and its commission would, itself, be legal under RCW 42.23.030, there would be any prohibition against the commissioner in question voting on matters pertaining to moorage rates or concerning possible improvements or repairs to the moorage facilities, etc.

            We respond to your inquiries in the manner set forth in the following analysis.

                                                                     ANALYSIS

            Question (1):

            RCW 42.23.030 provides, in pertinent part, as follows:

            "No municipal officer shall be beneficially interested, directly or indirectly, in any contract which may be made by, through or under the supervision of such officer, in whole or in part, or which may be made for the benefit of his office, . . ."

            This statute, however, then goes on to state that the foregoing prohibition does not apply in the following cases (among others):

            "(1) The furnishing of electrical, water or other utility services by a municipality engaged in the business of furnishing such services, at the same rates and on the same  [[Orig. Op. Page 2]] terms as are available to the public generally;

            ". . .

            "(7) The leasing by a port district as lessor of port district property to a municipal officer or to a contracting party in which a municipal officer may be beneficially interested, if in addition to all other legal requirements, a board of three disinterested appraisers, who shall be appointed from members of the American institute of real estate appraisers by the presiding judge of the superior court in the county where the property is situated, shall find and the court finds that all terms and conditions of such lease are fair to the port district and are in the public interest."

            Conceivably, in a given situation the legal relationship established through the furnishing of moorage space by a port district to one of its own commissioners could be such as to fall under subsection (1) of this statute as a form of utility service.  We particularly note, in this regard, that the establishment of rates and charges by a port district for wharfage or dockage (among other things) has expressly been made subject to the jurisdiction of the state utilities and transportation commission by so much of RCW 53.08.070 as reads as follows:

            "A district may fix, without right of appeal therefrom the rates of wharfage, dockage, warehousing, and port and terminal charges upon all improvements owned and operated by it, and the charges of ferries operated by it.  The port commission shall file with the utilities and transportation commission its schedule of rates and charges so fixed, as required of public service corporations.  It may change any rate and charge so filed by filing with the commission a notice of the proposed change not less than thirty days before the change shall go into effect."  (Emphasis supplied.)

            On the other hand, where the basic legal relationship involved is one of lessor-lessee (under which the user of the moorage space actually acquires a true leasehold interest therein) rather than that resulting from a mere transient wharfage, we understand that at least one port district in  [[Orig. Op. Page 3]] this state has taken the position, and is currently contending in proceedings pending before the utilities and transportation commission, that RCW 53.08.070 is inapplicable.  We have reference toBoat Owners & Tenants Association, Inc. v. Port of Seattle, Cause No. TPD-921, which involves the applicability of RCW 53.08.070 to the establishment of monthly or other long term moorage rates for the Shilshole Bay Marina which is owned and operated by the Port of Seattle.

            Because of the current status of this legal proceeding it would, for reasons of long-standing policy, be inappropriate for us to attempt to pass upon essentially the same question at this time in an attorney general's opinion.  In any event, a determination of the applicability or inapplicability of RCW 53.08.070,supra, to a leasehold situation would not necessarily be determinative of the RCW 42.23.030 question which you have here posed.  Nevertheless, the foregoing identification of the issues involved in the Port of Seattle case now pending before the utilities and transportation commission does seem to us to be helpful in focusing in on the proper application of RCW 43.23.030 to the situation you have described in your letter.

            By its express terms, subsection (7) of the latter statute clearly covers the leasing by a port district, as lessor, of port district property to public officers, including its own commissioners.  Therefore, if the true legal relationship involved in a given instance is one of lessor-lessee (even though the subject of the lease is moorage space in a marina type facility for pleasure boats and the like) that subsection, rather than subsection (1), would appear to apply.  Accordingly, the safest course of action to be followed by the commissioner in question would seem to us to be that of obtaining the approval of the presiding judge of the superior court of the county in which the property is located in the manner provided for in that subsection of the statute.  Such a procedure (although admittedly cumbersome) would clearly remove any legal objections to the lease whereas an attempted reliance, instead, on RCW 42.23.030(1),supra, would at least result in exposure of the transaction to possible legal challenge on the ground that something more than the mere provision of a utility service by the port district is involved.1/

             [[Orig. Op. Page 4]]

            Question (2):

            Assuming that the basic legal relationship between the port district in question and its commissioner has been established in a manner consistent with RCW 42.23.030 as above analyzed, it would be our view, in answer to your second question, that the commissioner involved would not be legally barred from voting upon such matters as the establishment of moorage rates or the improvements, etc., of moorage facilities by any existing statute.  Nevertheless, he might be well advised to refrain from doing so in at least some instances.  Otherwise, a possible legal challenge to the validity of the action could be made under what has come to be known as the "appearance of fairness" doctrine which our state supreme court has begun to develop in recent years.  See,Narrowsview Ass'n v. Tacoma, 84 Wn.2d 416, 526 P.2d 897 (1974); Anderson v. Island County, 81 Wn.2d 312, 501 P.2d 594 (1972);Fleming v. Tacoma, 81 Wn.2d 292, 502 P.2d 327 (1972);Buell v. Bremerton, 80 Wn.2d 518, 495 P.2d 1358 (1972); Chrobuck v. Snohomish County, 78 Wn.2d 858, 480 P.2d 489 (1971); andSmith v. Skagit County, 75 Wn.2d 715, 453 P.2d 832 (1969).

            It is true that thus far, with one exception, the basic subject matter involved in these cases has related solely to the regulation of a use of land ‑ as by zoning, comprehensive planning and the regulation of platting.  In only one case,State ex rel. Beam v. Fulwiler, 76 Wn.2d 313, 456 P.2d 322 (1969), has a somewhat comparable theory been successfully utilized to overturn an administrative act not related to land use regulation because of the participation of persons apparently "interested" in the result ‑ but that case, unlike the one with which we are here presented, involved the performance of an adjudicatory rather than a rule‑making function; namely, an administrative review of the discharge of a specific public employee.  We can, however, hardly be certain that this new, judicially established, doctrine will not, at some time in the future, be expanded to cover rule making (i.e., the passage of agency rules and regulations of general applicability as distinguished from an adjudication of the rights and privileges of specific parties) in a nonland-use context.  Thus, even though no clear legal impediment, statutory or otherwise, currently  [[Orig. Op. Page 5]] exists with respect to the actions contemplated by your second question it would seem wise to us for the port commissioner involved to refrain from voting on at least those matters which, because of his status as a user of the moorage facility with respect to which the particular action is being taken, could be expected to meet with public disfavor and a likely resulting legal challenge.  We would at least suggest that under the circumstances above outlined the commissioner in question consult, on a case‑by-case basis, with his port district's own legal counsel before deciding whether to vote upon, or otherwise participate in the resolution of, a particular issue.